Been lurking here for a while, and this board is the reason why I coughed up the money to become a Fool.

For lots of reasons, I have a poor credit record (FICO 534). I have just signed a home equity loan, rolling my credit card debt (about $5,000) over, and pulling some cash to cover buying a new-to-me vehicle, some other expenses, and to have some cash on hand for the inevitable glitches of life (which stash I plan to augment on a regular basis).

The HEL APR is less than the original mortgage, much less than the CC debt, and the loan will be paid off at about the date that the original mortgage would have been. Still the loan papers were hard to sign, because it has been *so hard* to hang onto the house, and watching that principal amount go up again was emotionally difficult. But it pencils out, IF...

IF I can stay off the CC merrygoround. Which is where you come in...

I love your stories, feel comforted that my situation is not as terrifying as it could be, and look forward to spending time with folks who know how hard controlling spending can be (my fleshandblood friends are disgustingly sane in this regard.)

The HEL APR is less than the original mortgage, much less than the CC debt, and the loan will be paid off at about the date that the original mortgage would have been. Still the loan papers were hard to sign, because it has been *so hard* to hang onto the house, and watching that principal amount go up again was emotionally difficult. But it pencils out, IF...

IF I can stay off the CC merrygoround. Which is where you come in...

Hello! Welcome to the Fool!!!

What steps are you going to take to ensure that you don't start charging on the CC's again? HEL's can be dangerous, because you still have the same amount of debt but a bunch of cleared cards.

Its probably advisable to either cut the cards up, or freeze them in a bowl of water so you can't use them!! You may also want to cancel the cards you don't need, and just keep 1 or two.

Greetings, jacqueg, congratulations on your efforts to consolidate and clean up the slate. How to keep it clean:

1) Freeze the cards or cancel them. Alternatively, keep out one of the cards but keep the credit limit small and pay it off every month, on time. (Did I mention it has to be paid off monthly before the due date?) :-)

2) You may have more success if you go warm-turkey on the spending. By this, I mean that you will want to budget a set amount of scratch that you get to spend every (week, two weeks, month - insert what makes sense for you) AND NO MORE. Yes, it will be less than you have been used to doing but that's where the issue of spending choices comes in.

3) If you don't have a budget (some call it a spending plan), that should be the next thing you do. For a couple of weeks to a month, keep a post-it note on your checkbook, your wallet, your credit card(s) and document EVERY PENNY (I am not kidding) you spend (or find!) and what you bought with it. You need to know where your money is actually going before you can figure out how best to direct it. Allow for those irregular gotcha expenses that may have contributed to your original debt - comb through your old credit card and bank statements to pinpoint irregular or unplanned expenses that are head-slappers, the ones where you say "ugh, how could I forget I was gonna owe THAT." This is the kind of category you pre-save a set amount each month for, knowing it will come up intermittently during the year (car insurance, gifts, travel). And insure you set up a category for savings (pay yourself first) and for an e-fund (meaning "emergency" fund) to cover unplanned expenditures.

As you've said, this board is a gold mine. Keep reading, and mining - you'll find resources here on how to lower your living costs and on good, fun informative managing-your-money reading (hint: become a user of your local library, for which you already pay taxes. Good place to get these books. Bye bye to Borders).

There actually comes a point for many who are optimistic about retiring debt where they actually enjoy the process of becoming mindful and frugal. It has its surprisingly fun aspects - instead of the thrill you get from buying the latest doodad, it becomes even more fun to figure out how you can live on 5-10% less than what you bring in, and about how to nose out bargains everywhere. It also becomes surprisingly enjoyable to find yourself in the mindset of readily and willingly refusing to spend a penny of your hard-earned cash that cannot justify being spent. Is it any wonder that people who conquer their debt dragons often go on to conquering other kinds of addictions, like smoking, junk food, shopping or anything else that keeps you chained down?

Anyway, best of luck and stick around. Controlling spending is always hard at first if you haven't been doing it but if you have a willing attitude, it can become second nature.

I love your stories, feel comforted that my situation is not as terrifying as it could be, and look forward to spending time with folks who know how hard controlling spending can be

Welcome to the Fool. Lots of good information and inspiration. Here is a little story to inspire you to keep both feet on the ground and off the CC carousel. I know you said our stories bring you comfort...however this overly dramatic little "fairy tale" is designed to curl your fingers around your scissors and clip your cards to bits. Hope you get a kick out of it. It was a hard lesson to learn.

The Tale of Copperpence and the Big Bad Refinance Mistake.

Once there was a naive young girl named copperpence. Okay, her real name was payumoff, but she recently decided she was ready for a change, ok?...Anyway

Copperpence was a relatively good person who always tried her best to do what was right. She was kind to those she loved, respected her elders, put grocery carts back in the cart corral and she was nice to animals. And for that she was rewarded with a magical power...a high FICO number! <oooohhhhh!> Well she got the FICO powers from making her payments on time but it's still magical

But she had a little problem that she didn't realize...she had a tendency to overspend.

The reason the lovely copperpence (hey...it's MY story! I can say she's lovely if I want to!)...Anyway The reason the lovely copperpence never realized her problem is in part due to the magical FICO. The Wicked Credit Card Companies hated high FICO powers and they taught copperpence to cast a spell using rectangular, magical plastic-stones with magnetic striping on them in order to destroy her FICO powers and charge her with <gasp> High Interest. What poor copperpence didn't know is that it was a spell that ensnared copperpence everytime she used the magical stones. A spell she willing fell prey to, but a spell nonetheless. The spell made it oh so easy to forget that she was borrowing money she really didn't have to spend. It was the evil E-Z Payments Spell! <shudder>

The E-Z Payment Spell gave copperpence everything she ever wanted, right when she wanted it. She could spend to her heart's content. <Oh the joy! cough choke>

But soon, the E-Z payments weren't so E-Z to keep up with. So along came the Home Equity Wizard.

Let me back up and give you a bit of history on the Wizard

Now up until a few years before, the Utopian kingdom where copperpence lived, otherwise known as Texas, had banned the Wizard from entering their fair kingdom. Many within the castle walls whispered tales of how he would only allow people to put their homes in danger and in the end, to run up more debt. But most of the villagers didn't believe the whispered tales and soon, the Wizard was welcomed into the kingdom by its legislators.

Many of copperpence's friends (who had also fell victim to the E-Z Payment Spell) had went to the Home Equity Wizard and he caused their E-Z payments to become E-Z once more. In some cases, he'd even caused their Credit Card Debts to completely VANISH!! <Oooooohhhhh!>

Please keep in mind that most vanishing acts are only sleight of hand and illusion. The debts didn't really disappear, they were merely consolidated.

So copperpence paid the Wizard a visit. He hunched over his magical Home Equity machine and consulted with his apprentices, Home Appraiser and Equifax. Together they were able to put together a magical encantation, causing copperpence's E-Z payments problems to all but disappear! <Aaaahhhhh!>

Copperpence was amazed and ever so relieved. She had not felt so free in years. With tears streaming down her face, she thanked the wizened old Wizard and both his apprentices. Just as she walked through the door, the Wizard's cackled warning reached her ears.

"The encantation will only bring you relief from mistakes past. It cannot keep you from the Wicked Credit Card Companies or the lure of their spells again. BE CAREFUL!"

Copperpence was just too full of joy to pay him much heed. Her past mistakes had been obliterated by the Wizard's magic and in her mind, the misery and suffering she'd been through before the Wizard had helped her would be enough to keep her from the lure of the E-Z payment spell. As she walked back into her highly mortgaged home, she casually tossed the magical stones the Wicked Credit Card Companies had given her into the drawer. "I am through with all of you!"

This made the dastardly evil Credit Card Companies more enraged and they vowed to destroy copperpence's magical FICO once and for all. They plotted and they schemed and within months had come up with the perfect plan...<dramatic pause>

DROP HER INTEREST AND RAISE HER LIMITS!

<Wait. Give me a moment. The horror of it all just overwhelms me...deep cleansing breath>

Poor copperpence didn't stand a chance because she had not yet learned the true moral of the story...LIVE BELOW YOUR MEANS AND SCREW THE CREDIT CARD COMPANIES

Three short years later, copperpence was in deeper debt...4 times the debt she had when she visited the magical Home Equity Wizard. So now she is locked in the dungeon of the Evil Credit Card Companies. A prisoner of their high interest hell, she sits at its gates warning off those who would visit the Wizard and not heed his cackled warning, "BE CAREFUL!"

I love your stories, feel comforted that my situation is not as terrifying as it could be, and look forward to spending time with folks who know how hard controlling spending can be (my fleshandblood friends are disgustingly sane in this regard.)

You've come to the right place to comiserate about CC debt. My suggestion about staying off the CC merry-go-round, remove the temptation. Take the cards out of your wallet, hide them, freeze them in water, as one person suggested. Do what ever you have to do to remove the temptation.

<What steps are you going to take to ensure that you don't start charging on the CC's again? HEL's can be dangerous, because you still have the same amount of debt but a bunch of cleared cards.Its probably advisable to either cut the cards up, or freeze them in a bowl of water so you can't use them!! You may also want to cancel the cards you don't need, and just keep 1 or two.>

Yes, my credit union is sending the payoffs with a letter to cancel the cards.

I got a Capital One offer for a 14.9% APR, which I have responded to (my current cards are over 25) and we'll see whether I get it. If not, I will get a secured card for $500 at the lowest rate I can find. And that's it, one is plenty. I also think the right credit limit for me, given my history and my income ($28,000), is no higher than $3,000. It will take a while to work up to that again, and I plan to ask for lower interest rates and no annual fee in lieu of limit raises.

In the meantime, I will be stashing at least $200 and hopefully $300 each month. I did manage to accumulate an efund once of about $2000, and the experience of having even that much was incredibly freeing. When the rainy day came, I could cope. But I've had a hard time rebuilding it, and the HEL should help by improving my cash flow.

My poor credit rating has mostly affected the kinds of credit card offers I get. I had a loan with my credit union several years ago, and paid it off, and my history with my mortgage holder (state veteran's) while not perfect, is good. But they don't report to CRAs, if they did, my FICO might well be higher. When I have employment problems, which seems to happen every few years, it's the CCs I put off in favor of mortgage, food, and utilities, and the CCs don't like that.

My main concern with the FICO score is insurance issues in the future, etc. After I've established a current good history with this loan at the credit union, I'll apply for one of their cards.

As I said, there are people on this board with more dire stories than mine, and that helps me to keep all this in perspective. Or as my boss says, "relax, no little children died as a result of this"!

This is absolutely wonderful! I'm going to print it up and keep it by my bathroom mirror!

The voice of experience...

Glad you enjoyed it.

But seriously, from the voice of experience, either cut the cards to shreds, freeze them or give them to a person you trust to hold them for you. If it helps, close all the accounts but one card that would be accepted anywhere and determine an amount you could afford to leave the limit at...say $500 ro $1000. Remove the temptation until you have changed your spending habits.

The LBYM board is invaluable...and a lot of cheap entertainment with the OT threads. Cheapskatemonthly.com has some great tips. Go to any search engines and type in Frugal Living or Cheapskate and you'll find lots of free information on cutting expenses.

When we refinanced four years ago, we added $12,000 worth of credit card debt to our mortgage, leaving us with a couple of thousand left on CC's. We didn't change our spending patterns. We didn't learn to budget. We simply took care of a symptom instead of going after the root cause.

A year ago, after a harsh wake-up call, I had to face our situation. Our credit card debt was right at $50K and we had several other debts (car & home improvement loans) that we didn't have before the home equity refinance. It's taken us this past year to rein our spending in and get our bills reorganized so we aren't going further into debt. It's only this past few months that I've been able to see some progress in our debt reduction.

It is so very hard at times paying the debt back, especially knowing it could have been so very different if...IF...IF...we had listened to all the warnings to cancel the credit cards and spend less.

And I commend you for seeking information and advice from the people here. That is something I didn't do and wish now that I had.